COMPANY MEANS A COMPANY INCORPORATED AND REGISTERED UNDER COMPANIES ACTS 2013 OR ANY OTHER PREVIOUS ACT.
Company is the most popular form of business organization. An increase in the size and volume of business has made it more difficult for sole trader or a partnership firm to run their business effectively because of lack of resources and technical know-how. Further, these two forms of business suffer from unlimited liability as well as absence of continuity of existence. In order to remove these limitations, a new form of business is developed called a "joint Stock Company".
A joint stock company is popularly known as "Company" or a "Corporation".
DIFFERENCE BETWEEN PUBLIC LTD AND PRIVATE COMPANY IS JUST ABOUT NUMBER OF MEMBERS AND MINIMUM CAPITAL
The Advantages of Having a Company Form of Business Organization
1. Limited Liability
The first and foremost thing that advocate us to suggest company form of organization to that of proprietor is that liability of the members and directors is limited to the extent of capital contributed by them. Future is uncertain and failure cannot be easily ignored in case of which the business may get insolvent the personal assets of the members and directors are not attached. In short personal assets and business are separate.
2. Legal Entity/Status or Recognition
"A private limited or public limited company is the buzzword in the corporate world " "It is only company form of organization that gives a global recognition" Companies act 2013 enables company to have status of separate legal entity which is different from its members and directors. As compare to proprietorship and partnership firm its prestigious and sophisticated form which entails less beauracratic barriers as to the litigation and Liasoning is concerned. Private limited company form is what the aspiring customers and suppliers look forward in an erra of globalisation and privatisation.
To gain the name and fame and to aquire overseas and big corporate client Private Ltd or Public LTD is the utmost requirement.
3. Perpetual Succession
By perpetual succession means a company survives forever unless it it dissolved through legal means. Any entry or exit of director doesn’t lead to end of the existence of the company. Every member and partner is free to come and go from business, it doesn’t affect the existence of company.
4. Project Cost and Risk Factors
When one thinks of major project either technical or other company form of organisation has an edge over the other forms in terms of lending and financial assistance from the bank and financial institution. Bank, financial institution always prefer company while lending the money or similar facility.
5. Easy Transferability
BY Transferability we mean transferring the business through the share transfers or other modes. Company form has enabled businesses to be easily transferred from one party to other party. One more advantage in monetary term is that this saves lot of money involved in stamp duty and allied liasoning ,statutory formalities fees.
6. Dual Relationship
In the company form of organisation it is possible for a company to make a valid effective contract with any of its shareholders/directors. It is also possible for a person to be in control of a company and at the same time be in its employment. Thus, a person can at the same time be a shareholder, director, creditor and employee of the company. For eg:
A) As a director he can receive remuneration.
B) As a shareholder he can receive dividend.
C) As a lessor he can receive lease rent.
D) As a creditor he can lend money and earn interest.
E) As a supplier he can supply goods from his/his family business.
7. Borrowing Capacity
It is well laid fact that company enjoys a soft corner of banks and financial institutions compared to that of partnership firms and proprietorship. When one thinks of undertaking finance to the proposed business then venture capital always prefer the company as they do have better prospectus.
8. Taxation In Indian context company taxability norms are much simplified and there are lot of benefit available like. Depreciation, set off and carry forward of losses. It is time of Indian economy being getting open to the foreign private players who do undertakes partnership with only company form of organizations and which Indian government pursues for subsidizing in terms of taxability norms.
9. Raising Money from Public
Company form of business allows entrepreneur to raise money from public through various means.eg. private placement, right issue, public issue, issue of debentures and other securities. Company can raise money from foreign players in form of FDI and ECB.